RHB IB: Data Centres A Catalyst For Malaysia’s Economic Growth
02 Oct 2024
Data centre (DC) investments are a catalytic enabler for raising Malaysia’s economic complexity and advancing its position on the technology ladder, said RHB Investment Bank Bhd (RHB IB).
In a research note, RHB IB highlighted that the timely development of the Johor-Singapore Special Economic Zone (JS-SEZ) serves as a potent stimulus, creating fecund ground for DCs to flourish.
“We continue to see DC-related news shaping market sentiment, driven by structural demand, a lower interest rate environment and multi-year investments by hyperscalers.
“DC investment approvals are expected to reach new highs in 2024, ahead of the enactment of guidelines for new builds. The investment pipeline remains robust, extending into 2025,” it said.
Additionally, Malaysia’s domestic DC landscape has received a significant boost from hyperscalers committed to establishing cloud regions.
“The multi-billion ringgit investments provide a strong foundation for growth, complementing investments from wholesale colocation providers,” it added.
According to DC Byte, more than 1.0 gigawatt (GW) of supply is expected to come online within the next two years, compared to the current installed capacity of less than 400 megawatts (MW).
“Approximately 3.0 GW of capacity is in the developmental stages and will be added progressively over the next three to five years.
“By 2028, potential DC inventory could be 10 times greater than what the industry has built over the past two decades.
“This would position Malaysia ahead of Singapore, Asia’s largest DC hub, where capacity is expected to stabilise at 1.4 GW due to land constraints and stricter conditions on new developments,” it noted.
RHB IB also anticipates accelerated adoption of artificial intelligence (AI) driving demand for scalable DC infrastructure.
“More complex AI models will lead to exponential growth in DC workloads, with increased investments in graphics processing units needed to manage and process vast datasets required to train AI models,” it said.
RHB IB’s preferred DC stock picks include Telekom Malaysia Bhd, Tenaga Nasional Bhd, IJM Corp Bhd and Mah Sing Group Bhd.
Source: Bernama
